Performance verifiability and output sharing in collaborative ventures

Article Abstract:

A mathematical model is used to examine the possible impact of the verifiability of contractual performance on the choice between a flat fee contract and an output sharing contract in a collaborative venture (CV) between two entities. The problem of choosing between the two types of contracts arises when both firms try to use the CV to exploit their complementary resources, but their performance in the venture cannot be accurately measured by their partner or by a third-party arbiter. The study investigates the mechanisms of arbitration and output sharing with respect to their role in motivating the firms involved in a CV to meet their contractual obligations that are not clearly and completely articulated ex ante and cannot be accurately verified ex post. The results are discussed.

Contracts, Strategic alliances (Business)

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Localization of knowledge and the mobility of engineers in regional networks

Article Abstract:

A study was conducted to examine the hypothesis that regional variations occurs in the localization of knowledge spillovers since there are regional differences among institutions and labor networks. The concept is based on the theory that variations in regions impact the spatial character of knowledge externalities. The objective is to address two questions, namely, the existence of variation across economic regions and the reasons for it. Findings indicate that externalities arise from the actions of skilled labor in spatially defined markets and that they are not created uniformly across all regions. Rather, externalities develop through the existence of broader social institutions supporting a viable flow of ideas within the spatial confines of regional economies.

Engineering Services, Economics, Research and Development in the Social Sciences and Humanities, Engineering & Architectural Services, Engineers, Demographic aspects, Externalities (Economics), Regional economics, Knowledge, Sociology of, Sociology of knowledge

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Joint ventures and the option to expand and acquire

Article Abstract:

The relationship between the timing of the acquisition of a joint venture and the exercise of the real option to expand was investigated. A sample of 92 joint ventures was used to test the hypothesis that a product-market signal that indicates a rise in the value of the venture triggers the timing of the acquisition. The results indicated that the probability of an acquisition was increased by unexpected product-market growth, and the probability of dissolution was not affected by unexpected shortfalls in product shipments. The results provide support for the hypothesis that joint ventures are options to expand.

Acquisitions and mergers, Corporate growth

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